Capitalism Should Be Taught

Dear Mr. Berko: I don't need advice, but I feel I have to tell you of an experience that I was not prepared for.

In 2008, my employer sold his business and ended my pension plan. I took a lump sum of $161,000 at age 55. All of us were left hanging with big checks. My co-workers and I, knowing nothing about stocks, read recommended financial books. They were boring and not very helpful, and I thought that if these writers were as smart as they claim, they'd stop selling books and use their time making money in stocks.

I went through five stockbrokers and bought mutual funds, common stocks, penny stocks, exchange-traded funds, options, real estate investment trusts, junk bonds and preferred stocks. After making lots of mistakes, I understand more of what I'm doing. It was trial and error, and some errors were scary. My $161,000 distribution went down to $127,000. It's now worth $191,000, and most of that $64,000 gain during the past few years came from Trex Co., American Woodmark and Amazon.com.

I got lucky! Most of my co-worker friends are barely even in this bull market. Our public schools should have taught us about investing. They failed us. — BL, Portland, Ore.

Dear BL: Experience is the best teacher. The second-best teacher is called early education! However, too many schools and teachers have a bias against capitalism.

Between 1957 and 1959, before time began for many readers, I was a full-time student at the University of Dayton and working the night shift (4 p.m. to 9 p.m.) at Merrill Lynch, Pierce, Fenner & Beane's Dayton office as a margin clerk, earning 90 cents an hour. I had to work because we didn't have massive student giveaway programs in those days. But that was three score years ago. A lot of water has flowed over the dam since then. The average daily volume was fewer than 2 million shares, and on Oct. 3, 1957, the day before Sputnik was launched, the Dow Jones industrial average stood at 465.

Merrill Lynch was advertising a super-wonderful stock market concept for the general public called the monthly investment plan, or MIP. Merrill designed a delightful and colorful brochure that clearly told the small investor how the plan worked. The MIP encouraged you to research several stocks and select the one or ones that appeared to have good fundamentals. Then you'd invest a minimum of $10 a quarter, and your contributions would purchase whole and fractional shares. The commissions were negligible. So after 20 or 30 years, early investors could have accumulated a portfolio of, for example, 107.765 shares of 3M, 149.679 shares of AT&T, 210.472 shares of American Express, 261.223 shares of Eli Lilly, 202.997 shares of Exxon, 271.669 shares of Boeing, 182.738 shares of Union Pacific, 223.553 shares of DuPont, 188.886 shares of Johnson & Johnson, etc. What a grand idea that educated the average working guy about capitalism and gave him a chance to make the system work for him.

I tried to encourage the Dayton, Ohio, public school system and the University of Dayton to include several courses I had designed about capitalism and the stock market to their curricula. I failed. But imagine how students who would have taken those courses could have benefited today. Capitalism is an important subject our children should begin learning in grade school, but we don't even teach it in our high schools. Rather, we teach tramp courses such as driver's ed, ceramics, dance, physical education, band, rhetoric, drama, media studies, Chaucer and cooking. And college courses are far worse, especially when schools have popular basketball and football teams.

Capitalism is the backbone of our country. However, a growing number of elected officials are finding fault with our economic system because a large portion of Americans don't have the skills to participate. Our politicians recognize this growing disconnect, and some believe that socialism offers superior economic policies and principles. However, I would remind them of a Winston Churchill quotation: "The inherent vice of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries."

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.